Policies ‘have helped cut bills’

Household fuel bills are £90 cheaper this year than they would be without the raft of policies to cut emissions and save energy, the Government has claimed.

Households will also be saving £92 a year on their electricity and gas bills by 2020, the Department of Energy and Climate Change (Decc) estimates, but the figure for the end of the decade is significantly lower than savings of £166 predicted last March.

The assessment shows that while measures to support clean power, such as subsidies for renewables, push up bills, other policies to save energy, including insulation programmes and regulations on more efficient appliances, bring them down.

This year the average household energy bill is £1,369, compared with an estimated figure of £1,459 if there were no Government energy policies. The £90 saving includes a £50 reduction as a result of moves brought in by the Government last December.

The majority of the £50 savings came from the Energy Company Obligation (ECO) scheme which helps vulnerable households with energy efficiency measures to provide them with warmer homes and cheaper bills.

Subsidies for low carbon power makes up around 5% of the average bill and energy efficiency measures make up around 2-3%, the assessment shows.

But gas use is down 10% and electricity use is 17% less as a result of policies that save energy, Decc said.

In 2020, the average energy bill will be £1,319, on central assumptions for gas prices by the end of the decade, compared with £1,411 if no policies were in place, a saving of £92.

In March 2013, the Government estimated policies would deliver savings of £166 in 2020, but the figure has fallen because gas is predicted to be cheaper than previously thought, while the savings from old efficiency programmes are less than thought.

By 2030, bills are predicted to rise to £1,524 with policies on emissions and energy savings, compared with £1,586 without any measures – though the estimates do not include extra policies that could be needed to cut carbon further.

Energy and Climate Change Secretary Ed Davey said: “We have the best energy security in Europe – and to stay that way we need to deal with a legacy of under investment and build a clean, secure energy system based on home-grown supplies.

“I’m determined that while we tackle these challenges, consumers don’t pay a penny more than they have to for the energy they use.

“We’re making homes warmer and cheaper to run, giving particular help to the most vulnerable people and avoiding the predicted energy crunch, meaning we can drive down bills and support investment in the economy with more secure energy supplies and more stable bills.”

The assessment shows that by 2020, Government climate and energy policies will add £188 to the average bill, including £92 to pay for low-carbon power such as wind farms.

But policies will also deliver savings of £276 from measures including home energy efficiency schemes, policy to make products more efficient and smart meters, which, once VAT is included, will lead to savings of £92, the report said.